Phishing and online scams are among the most common cyber threats affecting businesses. In 2024, over 80% of cyberattacks in India involved phishing attempts, leading to financial losses, data breaches, and reputational damage. Many businesses assume that their cyber insurance policy covers such attacks, but does it really?
This article explains:
✔ What phishing and online scams are
✔ Whether cyber insurance covers them
✔ How to ensure your business is protected
Understanding Phishing & Online Scams
Phishing is a type of cyberattack where hackers trick victims into revealing sensitive information like passwords, banking details, or business credentials. These scams often come in the form of:
- Email phishing – Fake emails that appear to be from legitimate sources.
- Spear phishing – Targeted attacks on specific employees or executives.
- Vishing (Voice Phishing) – Phone scams pretending to be from banks or IT teams.
- Smishing (SMS Phishing) – Fraudulent text messages with malicious links.
- Business Email Compromise (BEC) – Hackers impersonate executives to steal funds.
Phishing attacks can result in unauthorized financial transactions, data breaches, ransomware infections, and business disruption.
Does Cyber Insurance Cover Phishing Attacks?
1. Coverage Depends on Your Policy Type
Cyber insurance policies vary in coverage. While some policies explicitly cover phishing-related losses, others exclude them under “human error” or “social engineering fraud.”
2. Types of Cyber Insurance Coverage That May Include Phishing
✔ Social Engineering Fraud Coverage – Covers financial losses caused by employees tricked into transferring money or sharing sensitive data.
✔ Business Email Compromise (BEC) Protection – Covers losses from fraudulent email-based transactions.
✔ Fraudulent Funds Transfer Coverage – Protects against unauthorized money transfers resulting from phishing.
✔ Data Breach & Privacy Protection – Covers legal costs, customer notifications, and regulatory fines if phishing leads to a data breach.
3. What is Usually Not Covered?
🚫 Employee Negligence – If an employee willingly shares credentials, some policies may not cover the loss.
🚫 Unreported Incidents – Delays in reporting phishing attacks may result in claim denial.
🚫 Third-Party Scams – If a supplier or vendor falls for a phishing scam, your business may not be covered unless third-party liability is included.
How to Ensure Your Cyber Insurance Covers Phishing
✔ Read the Policy Carefully – Look for terms like “social engineering fraud,” “funds transfer fraud,” and “BEC protection.”
✔ Ask About Exclusions – Clarify whether phishing-related losses are covered.
✔ Enhance Cybersecurity Measures – Many insurers require businesses to implement:
- Multi-Factor Authentication (MFA)
- Employee cybersecurity training
- Email filtering and phishing detection tools
Final Verdict
Not all cyber insurance policies cover phishing and online scams. Businesses must choose policies that explicitly include social engineering fraud and funds transfer protection. Implementing strong cybersecurity measures can also lower premium costs and reduce risks.
Before purchasing cyber insurance, carefully review the policy terms and exclusions to ensure your business is fully protected from phishing attacks.
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